Dealers risk losing nearly £500m due to stock mispricing, says Indicata

Dealers could lose close to half a billion pounds in 2024 due to stock mispricing, according to a new analysis by Indicata.

The company’s real-time used car pricing platform identified two major errors costing dealers significant revenue: underpricing high-demand cars and holding onto underperforming stock without adjusting prices.

Indicata's analysis, which examined over 50,000 used cars across 300 UK dealer groups over a 12-month period, revealed that the largest financial hit - over £400 million - came from dealers selling their most sought-after cars too quickly.

These vehicles, priced at 100% of the market rate, were sold in under 30 days, missing the opportunity to charge a premium.

An additional £15m was lost by dealers who held onto lower-quality stock for more than 60 days without reducing prices, resulting in prolonged inventory turnover and missed sales opportunities.

To combat these losses, Indicata recommends that dealers adopt a dynamic pricing strategy, using real-time data to adjust prices based on market conditions.

 This includes pricing top-tier stock above market rates initially to capitalise on demand, and regularly reassessing prices if the vehicle hasn’t sold within the first month.

For average stock, dealers should aim for smaller profit margins early on and adjust prices regularly to avoid holding onto cars for too long. Slow-moving stock, Indicata suggests, is often best traded rather than retailed.

“The amount of profit being left on the table is alarming, particularly in a market with limited used vehicle supply,” said Dean Merritt, head of sales at Indicata. “Dealers need to commit to dynamic pricing supported by real-time data to maximise profitability, especially for high-demand vehicles.”

Merritt added that dealers should be patient with in-demand stock, pricing it above the market rate in the first few weeks, rather than rushing to sell it too quickly at lower prices.